Some, or perhaps most of us, will have heard the expression ‘strata sales’ – a term used in the Far East and Australia for the sale of office suites (as opposed to letting office space). The concept is well proven in far away continents but does the concept work in the UK? We at Nikal think so.

I first came across the concept when visiting Hong Kong. The idea of being able to buy portions of a building was not lost on me, after all the sale of floors and self-contained offices in the UK has happened before. What really intrigued me was how, in Hong Kong and other parts of the Far East, buildings were being portioned up into chunks of real estate that were being purchased by property groups and funds. The idea was quite simple and I was keen to test the logic here in the UK.

First Nikal needed to understand where the appetite in the UK would come from. It was quite clear that the pension sector allowed individuals to purchase commercial property, and we discovered in our research that this was a sector that had appetite for office ownership, particularly by company directors and owners who wanted to own their own office space.

This was quite neat. In effect, company directors could use their pension pots, individually or collectively, to buy their own office. In fact the opportunity for directors to gear their pension by 50% meant that they could buy their own office without having to use their own personal money or savings. After all, by buying in this way, they were acquiring an asset with an instant pre-let to their own business.

Our concept however was not to offer these people 'own front door' buildings. Our research showed that this was not where the real appetite was. Why? Because often such properties were too expensive or involved the headache of managing a building. These investors just wanted a clean no hassle property investment. It also had to be brand new!

Our starting point was to come up with a name for this concept and understand what the tipping point was on price.

We didn't like the term 'Strata sale'. No one understood it and it didn't reflect what we were trying to achieve in the UK. With much brain storming we settled on ‘MyBuro’. Buro being German for a place of work, writing and discussion, a writing desk or, in our mind, your own work space. We added ‘My’ to personalise the product. MyBuro was born.

It become clear from our research that, whilst there was real demand for office ownership in the UK, it was only at a certain price point. That price point was driven by the 'average' size of company director's pension pots. This theoretical pension pot was somewhere in the region of £75k - £300k per person. This settled our lot sizes to between £100k - £500k (for offices outside of London) which, in turn, drove the physical size of each office suite, generally between 300 and 2000 sq.ft.

Trying to sell this idea to banks and funds was not easy, in fact, nigh impossible! So we decided to pilot a scheme. It happened to be in Manchester but it could have been in any city centre or affluent town, where there is a good demographic of business ownership and community.

Our pilot scheme was a 10,000 sq.ft building, over three floors. (In the future we believe we can go up to 30,000 sq.ft on each building.) This initial size of building allowed us to speculatively build, but in the knowledge that, even if the suites didn't sell, they would certainly let.

So, we built our first brand new MyBuro office. We created 12 suites, ranging from 300 sq.ft to 1500 sq.ft and they sold very well. In fact we achieved sales prices equivalent to the rate per sq.ft that was being achieved for the best city centre office buildings sold to large investment funds, up to £500 per sq.ft. It was a revelation.

The key for MyBuro was that we were selling the net space. We were building office condominiums, selling them much like you would sell a flat, but adding a serviced office content with high quality reception and secretarial staff.

Some of the things we hadn't thought about became part of our strengths. For example, purchasers didn't need their personal reception facilities anymore, because we provided that function enabling them to become more efficient, and found that they attracted better and happier staff as a result of being in brand new office space (as opposed to trading above the local chip shop or from a converted terraced house).

We offered the sales on long leasehold interests - 200 years at a modest annual ground rent – so our scheme also brought us a small annual ground rent income. In addition, we created a sophisticated meeting room available for rent and provided all the conveniences of secretarial, IT and hospitality support and facilities, in return for a conventional monthly service charge consistent with all multi-occupied space and a 'pay as you go' bill for discretionary services.

So what were the ingredients to MyBuro’s success, the drawbacks and what does the future hold?

There are a number of secrets to MyBuro’s success: first, build a beautiful building, second, get the net saleable space as efficient as possible, third, as a developer be prepared to continue to manage the space, rather than walk away once everything is sold, and last, but by no means least, be passionate about and show belief in the product.

Drawbacks. A key concern at the outset was companies expanding or contracting, We’ve experienced both. One company expanded very quickly after buying so they simply moved to larger premises and gave us the keys to let the space for them. It turned into a great asset and investment for them. Two other companies contracted. In each case they divided their space up and we let the surplus. Simple and very effective.

The pilot has been a great success and has proved our point. Next we want to partner with a funder who shares our passion and belief in MyBuro, and can see its great potential, and roll it out on a larger scale. Our plan is to raise funding for at least 10 schemes over the next two years. At between £3m - £10m for each building, it requires some financial muscle, but it’s not often you get to establish a niche market that is resilient to economic uncertainty and makes a sound investment for the investor and end user.

Nick Payne - Nikal Limited